Can Health Courts Cure the Malpractice System?

Every physician knows medical malpractice claims are out of control. More claims are filed every year, and the average amount of awards has been steadily increasing - by as much as 500 percent over the last decade in some areas.

Meanwhile, increased claims and rising awards and settlements are driving the cost of medical liability insurance through the roof. Although many states have enacted legislation to cap awards, the effect has been to hold liability insurance costs at already inflated levels. Eventually those costs will rise again, or else insurers will stop providing coverage.

Everyone from legislators to insurers to physicians knows that something has to give. Even the president is on board with this kind of change. In a recent address to Congress, President Obama talked about the need to put patient safety first, let doctors focus on practicing medicine, and reduce unnecessary costs from medical malpractice. Under the directive of the president, the Department of Health and Human Services is funding a $25 million demonstrative initiative to explore new models that will reduce medical liability premiums.

So which model makes the most sense?

While the idea of specialized courts for malpractice claims isn’t yet on the table, they may soon have a place in the debate as tort reform gains momentum.

Imagine a specialty court that relies on educated judges, neutral experts, evidence-based proceedings, and a schedule of damages that not only keeps liability costs manageable, but also is better for patients. Sound too crazy to be true? It might be, but the idea has prominent supporters and a number of states are looking at ways to put this new malpractice system into practice.

Health court is now in session.

Not-so-blind justice

The idea of health courts isn’t a new one. “It’s a sort of new mutation of an older idea that really dates back about 20 years,” says Michelle M. Mello, JD, PhD, professor of law and public health in the Department of Health Policy and Management at the Harvard School of Public Health. “Virtually every academic commentator on health law agrees that administrative compensation is just much more promising than tort for remedying medical liability.”

It’s also an idea that has its basis in existing systems. Detractors such as the American Bar Association, which has come out publicly against the concept, claim that health courts deny patients access to a jury trial and full compensation. But specialty courts with presiding adjudicators already oversee areas such as bankruptcy, family law, and tax courts. Perhaps the closest comparison for the health court model is the workers’ compensation court system, where a judge or adjudicating panel hears testimony, determines the liability of employers, and decides on compensation awards.

Although there are various models under discussion, most ideas about health courts tend to focus on a few essential elements, which we’ll cover here.

Judges, not juries

Tort lawyers don’t want to talk publicly about it, but one of the problems with a jury trial for medical malpractice cases is that juries can be swayed by emotion. However, in the area of medicine - and especially when we’re talking about physician liability - what is desperately needed is a sober consideration of facts.

“Trial lawyers like to get in front of juries because juries are in some cases sympathetic,” says Michael D. Miscoe, JD, CPC, President of Practice Masters Inc., in Central City, Pa. “You venue shop - you look for venues that are more sympathetic and pay higher awards for a particular injury.”

Miscoe is a lawyer, a certified professional coder, and a compliance consultant who helps physicians avoid the types of documentation mistakes that sometimes end them up in court. In the area of medicine, getting the facts right is important - but juries don’t always understand those facts or their importance.

“Without any particular expertise in malpractice issues … you run the risk of seeing some of these insane awards for circumstances that kind of make you wonder whether our justice system is really working the right way or not,” says Miscoe.

Instead of juries, health courts would use experienced adjudicators who would be used to seeing the same kinds of cases again and again. In this way, judges would become accustomed to what injuries are preventable and when a physician is truly liable. While detractors deride this idea as “judges practicing medicine,” nothing could be further from the truth.

“We’re not talking about sending judges to medical school,” says A. Jenny Foreit, MPH, JD, senior counsel for healthcare at Common Good, a nonprofit organization with offices in New York and Washington, D.C., that has made health courts one of its strategic initiatives.

Foreit points to the workers’ compensation model and the role judges play in that process. An adjudicator with experience in the medical liability area is far less likely than a jury to be misled by inaccurate testimony and sympathy appeals.

Neutral experts

“One of the things we’ve tried to put forward with the health courts is access to neutral experts,” says Foreit. In fact, the concept of neutral experts is one of the key elements in Common Good’s health court model.

Because judges aren’t doctors, it’s important that they be able to consult with physicians and other medical experts who can give an honest, unbiased opinion on the medical facts of a case. Although the current system allows each party to bring so-called “experts” to testify, most of these witnesses have a vested interest in supporting whatever side is paying them. Lawyers from both sides end up bringing experts who will back up their case, and an entire profession of supposedly expert testimony has grown up around the medical liability system. But it’s basically devolved into a case of my expert vs. yours.

“I think in tort circumstances or malpractice cases it becomes all about the experts and who’s more credible and who’s not,” says Miscoe.

Medical experts with no vested interest in the outcome of a case can provide neutral testimony and help judges sort through the often complicated medical facts. Common Good and Mello, along with her colleagues at the Harvard School of Public Health, have suggested a model where independent experts would be drawn from outside the court’s geographic area and have no relation to that medical field in a particular state. “You wouldn’t have a Florida doctor weighing in on a Florida case,” says Foreit.

One of the criticisms of neutral experts is that such a system might tend to favor physicians. The theory is that doctors are less likely to negatively evaluate medical decisions made by their colleagues.

“I don’t know that that’s a valid criticism,” Foreit says. “You have bodily experts on both sides [in the current system]. You have physicians all the time who are willing to testify against physicians.”

Scheduled awards to more patients

One thing physicians and insurers both like about the health court concept is the idea of limiting awards to claimants. Most health court models propose a ladder or schedule of claim awards where a patient is compensated for his or her specific economic losses (e.g., medical bills, lost wages, etc.) and also according to the extent of damage suffered for noneconomic claims (what is sometimes called “pain and suffering”). But is that really any different than imposing a cap on awards?

“We believe that health courts are a better alternative than caps on awards because what we’re talking about is not limiting access to compensation but actually expanding it and simplifying compensation for medical injuries,” says Foreit.

So health courts would give awards to more claimants?

You bet. The 1991 Harvard Medical Practice Study found that less than 2 percent of patients injured due to negligence ever file a claim. Of the meritorious claims that are filed, about 25 percent never get paid. Even for those few patients who do get compensated, almost 60 percent of the current system’s total costs go to attorney fees, paid expert testimony, and various administrative costs. Part of the reason costs are so high is because medical liability cases can drag on for years as attorneys on both sides file motion after motion, appeal after appeal.

“We see [health courts] as a system that is very promising for remedying the problem of undercompensation that we see in the system right now,” says Mello. “Although a few people get very large awards, the overwhelming majority of injured patients get nothing.”

By keeping administrative costs low and adhering to a schedule of awards correlated to injury, health courts not only can provide restitution to patients who deserve it, but they also can expedite the process so that needy patients aren’t kept waiting for years and years. Workers’ compensation courts, which work similarly, often grant awards within six to nine months of filing.

While physicians and insurers see the benefit of such a system, do patients? After all, who wants to limit the potential size of their litigation award?

In a 2004 survey commissioned by Common Ground, 62 percent of respondents favored having medical malpractice cases tried in special courts. Only about 20 percent opposed setting up special courts for medical malpractice actions. “We’ve had really good response from consumer safety groups, consumer organizations, and patient safety organizations,” says Foreit. “The possibility under the current system of getting any sort of compensation is actually fairly low. What we’re talking about is broadening that.”

Negligence vs. avoidability

There are two things everyone needs to acknowledge if medical liability is ever going to change. First, Miscoe observes, “Sometimes bad things happen to people who aren’t really healthy.” True enough, but claimants often look to place blame for unfortunate and unhappy events.

The flip side of that idea is that doctors make mistakes.

“Doctors are people. They’re human,” says Miscoe. “We expect them to be perfect, but they can’t possibly be. What we can expect them to do is do the best job they can do. Malpractice is there for gross negligence, and what has become gross negligence is in some cases a mistake or an oversight.”

One of the most interesting concepts of Common Good’s health court model is the idea of changing the standard for compensation. Currently, medical liability rests on the notion of negligence. Was injury caused by the act or omission of a physician? Or, to put it another way, did the physician make a mistake?

Common Good’s model seeks to replace the standard of negligence with the concept of avoidability. The avoidability standard asks if the injury happened as a result of medical care or the withholding of medical care. Would it have been avoidable if best practices had been followed? In other words, not so much “Whose fault is it?” but “Could it have been avoided?”

“The idea with the avoidability standard is to decouple the compensation from provider malfeasance essentially,” explains Foreit. “What we’re talking about is separating those two concepts further so that provider discipline follows a different track than patient compensation.”

Too often, jury awards are used as a kind of penalty or punishment for a perceived injustice. The problem with this kind of system is that it relies heavily on both blame and sympathy - and neither of those do much to right either mistakes or gross negligence.

The current malpractice system has given rise to a culture of defensive medicine. According to a 2005 study in the Journal of the American Medical Association, more than 90 percent of physicians admitted to ordering unneeded tests and performing unnecessary procedures to protect against the possibility of future malpractice claims. The Department of Health and Human Services puts the cost of these practices at around $60 billion a year. A medical liability system where physicians no longer have to fear admitting mistakes would not only put an end to such “over-practicing,” but it also might even make patients safer.

“By getting rid of the negligence standard, we think you open up conversations about medical errors a great deal more,” says Mello. “You remove the stigma associated with reporting and disclosing errors.”

Mello and her colleagues at the Harvard School of Public Health envision a system that can collect data on medical injuries and errors that can be used to improve healthcare systems and safety procedures. Can you imagine a medical malpractice system that actually helps physicians provide better care?

Putting the model to work

If health courts are such a great idea, why isn’t anyone doing it yet? While the overall concept hasn’t gotten much further than the investigation stage in the U.S., several countries have already put health courts to work.

New Zealand’s health courts began with a compensation standard similar to the U.S. concept of negligence but have since transitioned to a treatment injury standard. Basically, all injuries due to medical management are compensated, regardless of physician error or whether the injury was avoidable. About three out of every five claims results in compensation, but overall claim rates are fairly low with only around 3,000 claims each year out of a population of four million people. And administrative costs are very low, too, at only 10 percent of the total system cost (as opposed to 60 percent under the current U.S. system).

The Scandinavian countries (Sweden, Denmark, Finland, Norway, and Iceland) all use the concept of avoidability in their health courts. In fact, Sweden pioneered the idea in 1975. The system uses expert reviewers and in-house claims adjusters who determine the total amount of awards. Like in New Zealand, the compensation rates under Scandinavian systems are fairly high, with Sweden compensating 40 percent to 45 percent of all claims filed. Actual awards tend to be fairly modest. Most of the claims are resolved with six to nine months of filing. Because of the “no-blame” nature of the system, physicians in Sweden help patients file for compensation in as much as 80 percent of cases.

Of course, both New Zealand and the Scandinavian countries have universal healthcare systems that help defray the costs of medical liability and health courts. In the U.S., Florida and Virginia have enacted similar, though smaller, programs specifically for birth injuries. The Florida Birth-Related Neurological Injury Compensation Plan, created in 1988, and Virginia’s Birth-Related Neurological Injury Compensation Program, started in 1987, both aim to manage the astronomical increases in malpractice insurance premiums for OB/GYNs within their respective states.

Each plan pays healthcare costs for infants who are born with specific neurological injuries, and neither plan relies on the negligence standard for patient eligibility. The Virginia system uses the Worker’s Compensation Commission to adjudicate claims, whereas the Florida plan has a separate oversight commission that coordinates medical review and decides on eligibility. Research shows that more than two-thirds of patients in the Virginia system would have chosen the program over a malpractice lawsuit. In Florida, patients are compensated much faster than they would be under a typical medical liability system.

A similar model that is gaining traction is the idea of arbitration. Arbitration already exists for private disputes of many kinds, and many states are looking at the arbitration model for handling medical liability without completely changing the current court system. “With arbitration, both parties would agree prior to the commencement of a treatment relationship that any disputes that arose from that relationship would be handled via arbitration rather than via the courts or via litigation,” explains Foreit.

Like a health court, arbitration uses an experienced adjudicator and, usually, neutral expert testimony. It also keeps administrative costs lower than the typical malpractice court system. Health insurers are really taking the lead on using arbitration to lower costs, and many health plans already offer or require arbitration. The Kaiser Permanente managed care health plan in California, for example, requires all members of the plan to settle injury disputes through its own independent arbitration board. And the Utah Medical Insurance Association, which provides medical liability insurance for physicians, offers a discount for physicians who merely offer arbitration as an alternative to their patients.

Get it right the first time

While health courts could eventually change the way medical liability is handled in the U.S., what can physicians do now to protect themselves?

Ever hear of the old adage, “Bad facts make bad law?”

Michael D. Miscoe, JD, CPC, a lawyer and a certified professional coder, knows the value of getting your facts right - and getting them down on paper. He’s seen more than a few malpractice cases won and lost on a physician’s documentation and coding.

“Those malpractice suits look to capitalize on an omission in the documented record to substantiate that the doctor did something wrong - when in actuality the doctor did everything right but just forgot to write it down.”

Miscoe recommends that physicians learn to document better and trust in-house experts who know coding and documentation rules. “More efficiency in documentation so that doctors can capture the work that they’re doing and their decision-making processes - that’s going to minimize malpractice risk,” says Miscoe. “Whether it’s the current judicial jury trial system or a specialized court, it won’t matter because you’ve taken the case away.”

Physicians who aren’t sure of best coding and documentation practices can rely on in-house certified professional coders or approach a risk management consultant who can visit their practice, evaluate their documentation, and give them an idea of what needs to be improved.

“Better documentation won’t eliminate medical mistakes in their entirety,” says Miscoe, “but it will eliminate the number of cases that are brought not because a mistake was made but because a doctor didn’t write something down.”

Robert Anthony, a former associate editor for Physicians Practice, has written for the healthcare and practice management industries for seven years. His work has appeared in Physicians Practice, edge, Humana’s YourPractice, and Publisher’s Weekly. He is based in Baltimore, Md., and can be reached via physicianspractice@cmpmedica.com.
This article originally appeared in the January 2010 issue of Physicians Practice.